Navy awards $33.9M for JBPHH construction, with 4 bids received

Contract Overview

Contract Amount: $33,918,430 ($33.9M)

Contractor: NAN Inc

Awarding Agency: Department of Defense

Start Date: 2020-08-10

End Date: 2024-03-05

Contract Duration: 1,303 days

Daily Burn Rate: $26.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: FY20 P-033 MAGAZINE CONSOLIDATION, PHASE 1, WEST LOCH, JOINT BASE PEARL HARBOR-HICKAM (JBPHH), OAHU, HAWAII

Place of Performance

Location: PEARL HARBOR, HONOLULU County, HAWAII, 96860

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $33.9 million to NAN INC for work described as: FY20 P-033 MAGAZINE CONSOLIDATION, PHASE 1, WEST LOCH, JOINT BASE PEARL HARBOR-HICKAM (JBPHH), OAHU, HAWAII Key points: 1. Contract awarded to NAN INC for construction services at Joint Base Pearl Harbor-Hickam. 2. The contract has a firm-fixed-price structure, indicating predictable costs for the government. 3. A total of 4 bids were submitted, suggesting a moderate level of competition. 4. The project duration is 1303 days, spanning over three years. 5. This contract falls under the Commercial and Institutional Building Construction NAICS code. 6. The award was made by the Department of the Navy, a component of the DoD.

Value Assessment

Rating: fair

The contract value of $33.9 million for building construction is substantial. Benchmarking this against similar projects requires detailed scope comparison, but the number of bids (4) suggests that pricing may not have been aggressively driven down by intense competition. Without specific cost breakdowns or comparisons to industry standards for similar construction projects in Hawaii, a definitive value-for-money assessment is challenging. The firm-fixed-price nature provides cost certainty, which is a positive aspect for budget management.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Four bids were received, which indicates a reasonable, though not exceptionally high, level of competition for this project. A higher number of bidders typically leads to more competitive pricing for the government. The presence of four bidders suggests that the market for this type of construction service in the region is accessible but may have a limited number of qualified participants.

Taxpayer Impact: With four bids, taxpayers likely benefited from a degree of price competition, preventing potentially higher costs that could arise from a sole-source or limited-source award. However, more bidders could have potentially yielded even greater savings.

Public Impact

The primary beneficiaries are the Department of the Navy and military personnel stationed at Joint Base Pearl Harbor-Hickam, who will receive improved facilities. The contract will deliver construction services, likely involving the building or renovation of commercial and institutional structures. The geographic impact is localized to Oahu, Hawaii, specifically at JBPHH. The project will likely create or sustain jobs in the construction sector in Hawaii, benefiting local workers and businesses.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen construction challenges arise, despite the fixed-price nature.
Dependence on NAN INC's performance and capacity to manage a project of this scale and duration.
Limited competition may have resulted in a higher-than-optimal price for taxpayers.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition ensures a broad base of potential bidders.
Project addresses critical infrastructure needs at a major military installation.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant part of the broader construction industry. The market for large-scale military construction projects is often specialized, with a mix of large prime contractors and smaller subcontractors. Spending in this sector is influenced by government infrastructure needs, defense spending priorities, and economic conditions. Comparable benchmarks would involve analyzing other large DoD construction contracts awarded in similar geographic locations or for similar facility types.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside (ss: false, sb: false). While NAN INC is the prime contractor, there is no explicit information on subcontracting goals for small businesses. The impact on the small business ecosystem will depend on whether NAN INC actively seeks to subcontract portions of the work to local Hawaiian small businesses, which could provide them with valuable experience and revenue.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Navy contracting command. Accountability measures are inherent in the firm-fixed-price contract terms, requiring NAN INC to deliver the specified construction within the agreed-upon price. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Military Construction, Navy
Base Realignment and Closure (BRAC) Projects
Department of Defense Facilities Modernization
Joint Base Pearl Harbor-Hickam Operations Support

Risk Flags

Potential for cost overruns if unforeseen site conditions arise.
Risk of contractor performance issues due to long project duration.
Limited competition may impact final price competitiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.9 million to NAN INC. FY20 P-033 MAGAZINE CONSOLIDATION, PHASE 1, WEST LOCH, JOINT BASE PEARL HARBOR-HICKAM (JBPHH), OAHU, HAWAII

Who is the contractor on this award?

The obligated recipient is NAN INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $33.9 million.

What is the period of performance?

Start: 2020-08-10. End: 2024-03-05.

What is the track record of NAN INC in performing similar large-scale construction contracts for the Department of the Navy?

Assessing NAN INC's track record requires a review of their past performance on similar contracts. This would involve examining their history with the Department of the Navy and other federal agencies, looking at project types, contract values, completion timeliness, and any documented performance issues or awards. A detailed analysis would involve searching contract databases for past awards to NAN INC, reviewing past performance evaluations (if publicly available), and cross-referencing with any reported disputes or litigation. Without specific past performance data for NAN INC, it's difficult to definitively assess their capability to successfully execute this $33.9 million project over its 1303-day duration.

How does the awarded price of $33.9 million compare to market rates for similar construction projects in Hawaii?

Directly comparing the $33.9 million award to market rates for similar construction projects in Hawaii is challenging without a detailed breakdown of the project's scope, materials, labor, and overhead. However, the fact that 4 bids were received under full and open competition provides some context. If the bids were clustered closely, it might suggest a competitive market price. Conversely, if there was a wide variance in bids, it could indicate uncertainty in pricing or a less efficient market. To perform a robust comparison, one would need to identify comparable projects (e.g., similar square footage, type of construction, location) and analyze their awarded values, adjusting for inflation and specific project complexities. Industry cost estimating guides and local construction cost indices for Hawaii would also be valuable resources.

What are the primary risks associated with this firm-fixed-price construction contract?

Despite the cost certainty offered by a firm-fixed-price (FFP) contract, several risks remain. For the contractor (NAN INC), the primary risk is underestimating costs, leading to reduced profit margins or even losses if unforeseen issues arise during construction. For the government, risks include potential quality compromises if the contractor seeks to cut corners to maintain profitability, or contractor default if they face financial difficulties or are unable to perform. Scope creep, if not managed tightly through contract modifications, can also become a risk, although FFP contracts generally make scope changes more costly. Furthermore, delays caused by factors outside the contractor's control (e.g., permitting, weather, supply chain disruptions) can impact project timelines and potentially lead to claims for extensions of time, even if not for additional cost under a true FFP.

How effective is the 'full and open competition' strategy likely to be in ensuring value for this specific project?

The 'full and open competition' strategy is generally considered the most effective method for ensuring value for taxpayer money, as it maximizes the pool of potential bidders and encourages competitive pricing. In this case, with 4 bids received, there was a reasonable level of competition. The effectiveness hinges on whether these 4 bidders represented a diverse range of capable firms and whether their proposals were thoroughly evaluated based on both price and technical merit. If the bids were highly competitive and closely aligned, it suggests good price discovery. However, if the number of qualified bidders was inherently limited due to the project's specialized nature or location, the 'full and open' aspect might yield less price pressure than in a more commoditized market. The ultimate value realization also depends on the government's ability to clearly define requirements and manage the contract effectively post-award.

What are the historical spending patterns for similar construction projects at Joint Base Pearl Harbor-Hickam?

Analyzing historical spending patterns for similar construction projects at Joint Base Pearl Harbor-Hickam (JBPHH) would provide valuable context for this $33.9 million award. This involves examining past contracts awarded by the Navy or other DoD entities for building construction, renovation, or infrastructure development at JBPHH. Key metrics to review would include the number of bids received on previous similar projects, the range of awarded prices, contract types utilized, and project durations. Understanding whether spending has been consistent, increasing, or decreasing, and whether competition levels have fluctuated, can help identify trends, potential cost efficiencies, or areas where costs may have escalated. This historical data can serve as a benchmark for assessing the current contract's value and identifying any anomalies.

What are the implications of the 1303-day duration on project management and potential risks?

A project duration of 1303 days (approximately 3.6 years) for a $33.9 million construction contract is substantial and carries specific implications. For project management, it requires sustained oversight, resource allocation, and coordination over an extended period. Long durations increase the risk of material price escalation (though mitigated by FFP if prices are locked), labor market fluctuations, and changes in regulatory requirements. It also heightens the possibility of encountering unforeseen site conditions or design challenges that may require modifications. From a risk perspective, the extended timeline provides more opportunities for external factors (e.g., environmental conditions, supply chain disruptions, changes in military operational needs) to impact the project. Effective risk mitigation strategies and proactive management are crucial for ensuring timely completion and adherence to budget over such a long period.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6247820R4042

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 636 LAUMAKA ST, HONOLULU, HI, 96819

Business Categories: Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $33,918,430

Exercised Options: $33,918,430

Current Obligation: $33,918,430

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline